On 1 October 2005 Omega granted 50 employees options to purchase 500 shares in the entity. The

Question:

On 1 October 2005 Omega granted 50 employees options to purchase 500 shares in the entity.
The options vest on 1 October 2007 for those employees who remain employed by the entity until that date. The options allow the employees to purchase the shares for $10 per share. The market price of the shares was $10 on 1 October 2005 and $10.50 on 1 October 2006. The market value of the options was $2 on 1 October 2005 and $2.60 on 1 October 2006. On 1 October 2005 the directors estimated that 5% of the relevant employees would leave in each of the years ended 30 September 2006 and 2007 respectively. It turned out that 4% of the relevant employees left in the year ended 30 September 2006 and the directors now believe that a further 4% will leave in the year ended 30 September 2007.

Required:
Show the amounts that will appear in the of Omega as at 30 September 2006 in respect of the share options and the amounts that will appear in the income statement for the year ended 30 September 2006.
You should state where in the and where in the income statement the relevant amounts will be presented. Where necessary you should justify your treatment with reference to appropriate international financial reporting standards.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...